(Bloomberg) — U.K. dividends are now seen reaching 92.2 billion pounds ($116.4 billion) this year thanks to a boost from commodities firms, providing an additional lift to one of Europe’s best-performing stock markets.

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That’s the view of consulting firm Link Group Plc, which cited higher payouts from mining and oil companies, as well as the contribution from U.K. bank dividends, for a 4.5 billion-pound hike to its January forecast.

Adjusted underlying payouts — excluding special dividends and accounting for the shift of mining giant BHP Group Ltd away from a primary listing in London earlier this year — will rise 15% to 85.8 billion pounds, the report said.

“Commodity and oil prices have soared, bolstering the prospects for two of the U.K.’s biggest dividend paying sectors, while banking payouts continue their post-Covid-19 recovery at a slightly faster pace than we expected,” said Ian Stokes, managing director, corporate markets U.K. and Europe at Link Group.

After slumping in the aftermath of the pandemic, dividends have been bouncing back from a nine-year low of 64.4 billion in 2020, according to Link Group’s data. In the first quarter, U.K. payouts were up 12.2% excluding special dividends and BHP’s impact, the report said.

U.K. stocks have outperformed most other major benchmarks this year, partly due to the high proportion of oil and mining stocks in the U.K.’s gauge. The country’s FTSE 100 Index — little changed year-to-date compared with a more than 10% decline for the S&P 500 Index — also still offers one of the highest forward dividend yields globally, at about 4%.

Still, the reliance on commodities sectors for payouts carries risks.

“The mining sector cannot sustain its breakneck pace of dividend increases nor the size of its special dividends indefinitely, but the boom continues for now,” Stokes said, adding that the war in Ukraine was partly responsible as it has pushed commodities prices higher.

Other risks for U.K. companies — and their dividends — this year come from input cost pressures weighing on margins and the squeeze on U.K. consumers.

“Mid-cap companies are likely to suffer a greater impact from the constraints on consumer demand caused by cost-of-living increases, but the biggest companies are more insulated or are even benefiting – notably the oil and mining sectors,” the report said.

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